This dissertation addresses the question of why the labour market outcomes of higher education (HE) graduates differ from those of vocational education (VET) graduates within European countries. To date, these educational groups, different in educational level and in educational orientation (specific vs. general), have hardly been considered within comparative transition research and how both groups interact within different educational contexts remains under-researched.To answer the question, a three-layer theoretical model is proposed. In addition to the institutional and the individual level, the occupational level is considered as well. This is because both educational groups are prepared for different occupational sectors. The main theoretical assumption implies that institutional features of the education system moderate the closure of certain occupations and thereby affect individual labour market outcomes (matching). The focus is on two institutional characteristics: the selectivity of tertiary education and the specificity of vocational education (compared to tertiary education). While selectivity strengthens the signalling of university degrees and opens up the occupational structure for tertiary graduates, the higher occupational specificity of the VET stage (compared to the HE stage) in turn has a positive effect for VET graduates. Furthermore, it is assumed that the two institutional characteristics complement each other. This is based on the assumption that they operate at different layers of the labour market. While strong selectivity regulates entire labour market segments by the level of education, occupational specificity affects the closure of jobs within these segments by the signalling effect of educational programmes (field of education). These theoretical assumptions are tested with multilevel analyses based on the Labour Force Survey data (EU-LFS 2009) in 28 European countries. The analyses confirm most of the theoretical assumptions and allow country clusters that differ according to the constellation of both institutional settings to be defined.The dissertation contributes to the understanding of how educational institutions affect the individual labour market outcomes of two groups with different educational levels and educational programmes. In addition, it provides an understanding of the complementarities of educational institutions.